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“Experts expect the gains to continue, though not necessarily at such a brisk pace.” – L.A. Times Business Section

We ended 2012 with sharp gains, rounding out the first solid year of sustained improvement in the real estate industry after nearly five years of frustration. This gain has also helped to pave the way for further improvement in 2013.

The region’s median home price registered a 19.6% burst in December, real estate firm DataQuick reported Tuesday. A record level of cash buyers flooded into the market and more move-up homes sold last month. While housing is on the road to recovery, the recent steep increase in the region’s median price probably reflects several factors, such as the mix of what sold in December, and the run-up may not continue at that brisk pace, experts said. The median is the point at which half the homes in the region sold for more and half for less.

“There is no possible way that number can be sustained nor should anybody look at that as a long-term trend,” said Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. “We haven’t shifted from bust back to bubble, and nobody should think we have, and nor likely will we.” The median is heavily influenced by the types of homes selling, and some of last month’s pricier sales may have been driven by fears of increased tax burdens on the wealthy, as Washington wrangled with the “fiscal cliff” negotiations.

A rise in prices will mean more homeowners who had been underwater — owing more on their mortgages than their homes are worth, a condition also known as negative equity — can now put their properties on the market. That would help ease the region’s inventory squeeze, which is another major factor driving up prices.

The 2012 housing rebound came after foreclosures declined, housing inventory plummeted, mortgage interest rates hit record lows and demand from investors surged last year. “Consistent price increases throughout 2012 have started the process of lifting households out of negative equity, which will support home sales and refinancing volumes,” Paul Diggle, an economist for Capital Economics, wrote in an emailed analysis. “Lower levels of negative equity is good news for housing market activity and sets up a virtuous circle of rising activity leading to rising prices and pushing negative equity down further.”

The decline in foreclosures has been aided by an increase in short sales, as The Times recently reported, as well as other loan aid for borrowers. The drop in foreclosures should continue to help lift prices.

“For 2013, we largely expect more of the same,” Sean O’Toole, chief executive of ForeclosureRadar, wrote in a blog post this week. “Demand will remain strong thanks to Federal Reserve-manipulated low interest rates and affordability. Housing supply will remain constrained, largely due to government foreclosure intervention. As a result, prices will rise, though likely at a slower pace.”

The increase in the median home price in Southern California reflects market dynamics as fewer sales are logged in cheaper neighborhoods and pricier places take off.

Her take:
“The fact is, more of us are getting rich by buying and paying off our homes than by picking the next Facebook.”

DeZube goes on to offer up some a few interesting statistics from the National Center for Real Estate Research:

6 in 10 of us have more home equity than stock equity.

A fifth of Americans’ total net worth is home equity.

Home owners accumulate, on average, $167,000 in their lifetimes, compared to $42,000 for renters.

The median wealth for the poorest American home owners, those earning less than $20,000, is 81 times that of renters with similar income.

A recent study into the fluctuations in home prices found that, “Buying was still more likely to generate wealth than renting, simply because renters are more inclined to spend instead of save and invest in stocks.”

The fact is that even though renting may feel like the cheaper route, the “forced savings” incurred via home ownership is far more likely to lead to wealth than renting.

“Many of us simply don’t have the willpower or motivation to save our discretionary income and invest it in stocks.So unless you’ve got the inside track on the next hot future IPO, keep making your mortgage payments.”

A: A short sale involves the sale of an “under water” property, whereby the proceeds of the home sale will be LESS than the total mortgage balance and the owner cannot afford to pay the balance of the debts against the property. Purchasing such a property requires that the bank agree to accept less than the amount owed on the property, releasing the lien on the property. According to realtor.org, ” A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan”

Houselogic.com explains foreclosure as “The process whereby a lender, such as a bank, seeks to repossess a property where the owner has failed to comply with the terms of the mortgage or promissory note, such as not making a payment. Once the property has been foreclosed, the bank can then sell the house, using the money to pay its costs.”

AOL Real Estate offers an explanation to help distinguish one from the other, in that, “Short sales can also be referred to as ‘pre-foreclosure sales’ which, as the name implies, precedes the home being officially repossessed or foreclosed on by the lender. That is, the property is sold much earlier than the months it typically takes to reach foreclosure, allowing all parties to move on from the transaction sooner.”

If you have a hard time making sense of everything included in your monthly mortgage statement, you now have a chance to help get that changed. Earlier this week, the Consumer Financial Protection Bureau (CFPB) announced that they are seeking public input on a draft monthly mortgage statement designed to make it easier for homeowners to understand their loans and help avoid any extra costs or fees.

According to CFPB Director, Richard Corday:

“This draft statement shows consumers the breakdown of their mortgage payments – what money goes to the loan principal, interest, and fees…This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up. Given the widespread mortgage servicing problems we’ve seen over the past few years, consumers need clear disclosures they can count on.”

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, most borrowers must receive periodic statements with specific information about their account, most typically typically from their mortgage servicers. According to CFPB. statements must include information regarding:

the principal loan amount

the current interest rate

the date on which the interest rate may next reset

a description of any late payment and penalty fees

information about housing counselors

a telephone number and email address that may be used to contact the mortgage servicer

Currently the CFPB is testing out a prototype monthly statement with consumers to make it as user-friendly and useful as possible. In a press release posted on their website, the CFPB explained:

“In order to broaden the input it receives as it develops a standard statement, the CFPB is also posting the prototype online to solicit general feedback from consumers, industry stakeholders, and other interested parties. The public will have further opportunity to provide comment on a version of the draft standard form when CFPB proposes a rule on it later this year. The development and publication of a consumer tested and publicly-vetted monthly statement will benefit consumers and facilitate compliance by mortgage servicers and creditors.”

The prototype is scheduled to become available for public comment sometime this summer.